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Partnership & Limited Liability Partnership

If you wish to form a business with someone else, you might be better off by choosing a partnership or limited liability partnership. In both legal structures there need to be at least 2 partners to form a business, however, there are some circumstances in which one is more advisable than another.

In partnership, individuals involved in the business agree to share their profits or losses and are personally liable for any debts undertaken. Partners are also liable for each other's misconducts, risks and costs. Each partner must submit a self assessment to pay tax on their share of the profit.

An LLP (Limited Liability Partnership) is run similarly, except that the liability of each partner is limited to the amount of money invested by them in the business. LLPs are also registered in Companies House and information about the partners are publicly available. Annual accounts must also be submitted, but profits of the LLPs are taxed on member's portion through self assessment.

Choosing the best and most tax efficient entity can be confusing. With our help guide to business structures, you should be able to make the right decision when starting a business. Check our previous posts to find out more about Limited Liability Companies and Self Employment.

If you still struggle to make a choice or you're interested to know more, don't hesitate to contact us.


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